The economistic fallacy and forms of integration under and after socialism

Abstract

The concept of ‘the economistic fallacy’, theorized most elaborately in a posthumous work, is central to the entire oeuvre of Karl Polanyi – and to its endemic ambiguities. While previous discussion has focused on capitalist and pre-capitalist societies, this paper explores the alleged fallacy in a socialist framework. Drawing on field-work in a village on the Great Plain, it is argued that the Hungarian variety of ‘market socialism’ brought about a successful balance between the Polanyian ‘forms of integration’, in a conjuncture which stimulated household accumulation and promoted the interests of the rural population as a whole. Since the demise of socialism, this balance has been lost. A renewed economistic fallacy can be detected in the era of neo-liberal capitalism, but in Hungary the scope for household accumulation has greatly diminished, and the high price paid by the countryside is reflected in reactionary political movements. Polanyi sometimes fell into the trap of an anti-market, ‘collectivistic fallacy’. However, if the economistic fallacy was dominant in the ‘nineteenth-century consciousness’ which he lambasted, the twentieth century demonstrated the inadequacy of Marxist-Leninist-Maoist alternatives in their purist forms. The Hungarian case exemplifies the more general challenge: how to institutionalize substantivist mixed economies which allow individuals and households appropriate space for ‘economistic’ behaviour in markets to meet some of their needs, without indulging the fantasy that reduces human motivations to utility maximization and socio-cultural complexity to a generalized market rationality.